2016 (1) TMI 1368 - AT - Income Tax

TDS u/s 194J - disallowance of channel placement fees u/s. 40(a)(ia) - As per revenue channel placement fee is in the nature of royalty u/s. 9(i)(vi) - Held that - Tribunal in the case of Viacom 18 Media Pvt. Ltd. 2015 (12) TMI 139 - ITAT MUMBAI has decided this issue in favour of the assessee and against the Revenue by relying upon the decision of the Hon ble Delhi High Court in the case of Prasar Bharati (Broadcasting Corporation of India) 2006 (11) TMI 159 - DELHI High Court two provisions are introduced in the Act, one specific to the activity sought to be taxed and the other in more general terms resort must be had to the specific provisions which manifests the intention of the Legislature. It is not, therefore, possible to accept the contention of the Revenue that programmes produced for television, including commissioned programmes , will fall outside the realm of section 194C, Explanation III of the Act. - Decided against revenue

Summary

Issues:
1. Disallowance of channel placement fees under section 40(a)(ia) of the Act.
2. Characterization of channel placement fee as royalty under section 9(i)(vi) of the Act.
3. Request for reference to Special Bench regarding the applicability of the principle of "Lex non cogit ad impossibilia" to Explanation 6 to Section 9(1)(vi) of the Act.

Analysis:
1. The appeals and cross objections were filed against the orders of the DRP-IV, Mumbai for two different assessees concerning the assessment year 2010-11. The Revenue's grievance was related to the direction of the DRP not to disallow channel placement fees under section 40(a)(ia) of the Act.

2. The Revenue contended that channel placement fees should be treated as royalty under section 9(i)(vi) of the Act, thereby subject to TDS under section 194J. The assessee argued that similar issues had been decided in their favor in previous cases and cited relevant judgments in support of their position.

3. The Departmental Representative urged to refer the matter to a Special Bench based on a previous decision favoring the Revenue. However, the Tribunal found this request unfounded as the issue at hand involved channel placement fees, not transponder payments as in the cited case. The Tribunal also noted that previous decisions favored the assessee and rejected the need for a Special Bench, ultimately dismissing the Revenue's appeal and rendering the cross objections of the assessee irrelevant.

4. The Tribunal's decision was based on a thorough analysis of the facts, previous judgments, and the specific nature of the payments in question. By aligning with the findings of the Co-ordinate Bench and considering the precedents that supported the assessee, the Tribunal dismissed the Revenue's appeal and denied the request for a reference to a Special Bench.

5. In conclusion, the Tribunal pronounced the order in open court on January 12, 2016, deciding in favor of the assessee based on the existing legal interpretations and precedents, thereby dismissing the Revenue's appeal and denying the request for a Special Bench reference.